An Accelerator is a structured program designed to rapidly support the growth and development of enterprises by providing mentorship, training, funding opportunities, networks and technical assistance within a defined timeline. In the impact ecosystem, accelerators help strengthen social enterprises and scale impact-driven solutions.

Accountability refers to the obligation of an organization, program or investment to be responsible for its decisions, use of resources, actions and outcomes, and to transparently explain and justify them to its stakeholders. Within the impact ecosystem, accountability includes not only financial transparency but also the measurement, reporting and disclosure of social and environmental impact, ensuring trust, credibility and effective impact management.

Activities refer to the specific actions, processes and interventions carried out to achieve the objectives of a program, project or investment. They represent the implementation phase where inputs are transformed into outputs and form the foundation for outcomes and long-term impact within the impact chain.

Additionality refers to the positive outcomes that would not have occurred without the investment or intervention. It ensures that the impact generated is real, attributable and represents genuine added value rather than something that would have happened anyway.

An Angel Investor is an individual who provides equity or convertible financing to early-stage ventures while often offering mentorship, expertise and strategic networks. In the impact ecosystem, angel investors support enterprises creating social and environmental value.

An Asset Management Company is a firm that professionally manages investment funds and client portfolios, develops investment strategies and ensures efficient capital management.

An Asset Manager is an individual or institution responsible for managing financial assets and making investment decisions on behalf of clients or funds, seeking to optimize returns while managing risk.

Attribution refers to assessing the extent to which observed changes can be reasonably attributed to a specific intervention, programme or investment, particularly in contexts where multiple factors influence outcomes and causal proof is limited.

The initial set of data collected before a project, programme or intervention begins, representing the existing situation and serving as a reference point. A baseline enables comparison, supports performance assessment and helps determine the extent to which observed changes are attributable to the intervention.

A reference value, standard, or metric used to compare and assess the performance, outcomes, or targets of an entity, investment, or activity. A benchmark enables the evaluation of relative performance, progress, or adequacy against a defined point of comparison.

Beneficiaries are the individuals, communities or organizations that directly or indirectly benefit from a program, policy, investment or intervention. Identifying beneficiaries and understanding how they are affected is essential in impact management.

Blended Finance refers to a financing approach that strategically combines public resources, development finance and philanthropic capital with private sector investment in projects that generate measurable social, environmental and development impact. Its primary objective is to reduce risk, improve return profiles and mobilise additional private capital. Within this framework, public or catalytic capital is deployed through instruments such as guarantees, first-loss capital, concessional financing or technical assistance in order to enhance the financial viability, scalability and attractiveness of investments for private investors.

The Blue Economy refers to an approach that seeks to generate economic growth, employment and social well-being while preserving marine biodiversity and the health of ocean and aquatic ecosystems through the sustainable use of marine and water resources. It encompasses areas such as marine biodiversity conservation and restoration, sustainable fisheries and aquaculture, climate resilience, ocean-based renewable energy, blue tourism, pollution reduction and blue finance. The blue economy is grounded in the principle that long-term economic value depends on maintaining healthy and resilient marine ecosystems.

A bond is a debt instrument issued by public authorities, corporations or other entities to raise capital from investors, typically involving periodic interest payments and the repayment of principal at maturity. Despite the use of the term “bond” in their name, impact bonds are not bonds in the conventional financial sense. Impact bonds are not fixed-income securities; instead, payments to investors are contingent on the achievement of pre-agreed outcomes.

Bounded flexibility is an approach used in standard-setting processes to manage the tension between variability and the need for decision-making. It aims to provide sufficient flexibility to adapt to different contexts and needs, while maintaining an appropriate level of standardization that enables informed and comparable decisions to be made. Through bounded flexibility, multiple options may be offered to stakeholders; however, because these options are defined within shared principles and frameworks, consistency, comparability and accountability are maintained.

The Business Case is an analytical framework prepared to justify the implementation of a project or programme, assessing the benefits, costs, and risks of different options. It demonstrates why the selected solution is the most appropriate option. In the context of impact bonds, the business case also includes an Impact Case. This component sets out how the intended social and/or environmental impact is planned to be achieved, through which mechanisms, and under which assumptions.

A Business Plan is a structured document outlining an organization’s goals, strategies, operational roadmap, financial projections and implementation approach. In impact-driven initiatives, it also incorporates clear impact objectives and measurement strategies.

Capital Markets are financial markets where long-term funding is raised and traded, enabling the transfer of capital between investors and institutions through instruments such as bonds, equities and investment funds.

A Capital Provider is an individual, organization or institution that supplies financial resources to projects, enterprises or funds, including investors, DFIs, governments, foundations and private funds.

Catalytic Capital is a form of capital that, compared to prevailing market conditions, is more flexible, has a higher risk tolerance, and is long-term in nature, enabling investments in areas where private sector capital struggles to participate. Its purpose is to activate markets, improve investment viability, and scale social and environmental impact. Catalytic capital attracts other investors by absorbing risk through instruments such as concessional finance, first-loss capital, guarantees, and similar mechanisms.

Causality refers to determining whether and to what extent the observed change is a direct result of the intervention, forming a core element of credible impact evaluation.

A Charity (or Philanthropic Organization) is a non-profit entity established to serve public benefit, operating without distributing profit, and typically funded through donations, grants and voluntary contributions. Its mission is to address social needs, support vulnerable groups and enhance societal well-being. Within the impact ecosystem, charitable organisations are increasingly assuming a more strategic role by adopting impact-oriented, measurable and sustainable approaches to social value creation.

Clean Technology (Cleantech) refers to environmentally friendly technologies that reduce emissions, minimize environmental harm, improve resource efficiency and support sustainable production and consumption, including renewable energy and efficiency solutions.

They are risks arising from extreme weather events or long-term environmental changes caused by climate change (such as floods, droughts, and rising temperatures).

Climate Tech refers to technological solutions and systems designed to mitigate climate change, reduce carbon emissions, support adaptation and accelerate sustainable transformation. It includes renewable energy technologies, energy efficiency innovations, carbon capture systems and circular economy technologies.

Climate-related physical risks arise from the physical impacts of climate change, including extreme weather events and long-term environmental shifts.

Collective Impact is a collaborative approach in which multiple stakeholders from different sectors work together through shared goals, common measurement systems, coordinated actions and continuous collaboration to address complex social and environmental challenges. Impact is generated through joint effort rather than individual action.

Concessional Finance refers to funding provided under more favorable terms than market conditions, such as lower interest rates, longer maturities or flexible repayment structures, often supplied by public, development or philanthropic capital. It aims to de-risk investments and mobilize private capital into high-impact areas.

The Conference of the Parties (COP) is the primary global forum where parties to the UN Framework Convention on Climate Change meet to negotiate, decide and coordinate international climate action.

Corporate Social Responsibility (CSR) refers to companies’ voluntary commitment to act ethically and responsibly toward society and the environment, beyond their economic and legal obligations. Increasingly, CSR is evolving from charity-based initiatives toward more strategic and measurable impact-focused approaches.

Cost Allocation is the process of systematically distributing costs across specific activities, departments, projects or impact areas within an organization. In the impact context, it helps accurately assess impact creation costs, analyze efficiency and support strategic resource management.

Counterfactual refers to the change that would have occurred through alternative pathways even in the absence of an investment, intervention, or programme. This concept enables the distinction between the portion of an observed impact that is genuinely attributable to the intervention and the portion that results from natural or external processes.

In the context of SDG Impact Standards, goals that may not necessarily be considered a priority in a particular context but are a priority at a systems level and require collective action to achieve the SDGs by 2030.

Crowdfunding is a financing method in which capital is raised from a large number of individuals or organizations, typically in small amounts, through online platforms. It may take the form of donation-based, reward-based, debt-based or equity-based crowdfunding.

Classification of data into categories and sub-categories, with controls to improve data quality, reliability, consistency and comparability.

Deal Flow refers to the volume, quality and continuity of investment opportunities presented to investors. A strong deal flow indicates a dynamic ecosystem and accessible pipeline of viable investments.

Social and human and natural resources and relationships that enterprises need to create and sustain value. An entity’s impacts and dependencies are interrelated.

A Development Finance Institution (DFI) is a public or semi-public financial institution that supports sustainable economic development, job creation and social impact by financing investments in developing or emerging markets, often in areas where commercial financing is limited. DFIs play a catalytic role in mobilizing private capital.

A Development Impact Bond (DIB) is an outcomes-based financing and contracting model in which private investors provide upfront capital to fund a social or development programme. Repayment and returns are made only if independently verified outcomes are achieved, typically by outcome funders such as donors, foundations or multilateral development institutions, rather than governments. In DIBs, governments often act as implementing or policy partners but are not usually the direct outcome payers. The model aims to improve the effectiveness of development spending by shifting performance risk to investors until results are delivered and by incentivising measurable and verified impact.

The Double Bottom Line refers to an approach that aims to monitor, measure, and report not only an organisation’s financial performance, but also its social and environmental impact through a balance-sheet-like structure. Under this system, an “impact balance sheet” is developed alongside the financial balance sheet, enabling a more holistic view of the organisation’s total value creation.

Double Materiality refers to the assessment of issues based on both their financial significance to an organisation and the organisation’s impacts on society and the environment.

A framework for sustainable development that combines the concepts of planetary boundaries with social boundaries. Developed in 2012 by Kate Raworth.

Due Diligence is the comprehensive assessment and verification process conducted prior to an investment, partnership or major decision to evaluate an entity’s financial, legal, operational, governance and impact-related conditions. Its aim is to identify risks and opportunities, ensure compliance and support informed decision-making. In impact investing, due diligence extends beyond conventional financial and legal reviews to include impact risk, impact potential, stakeholder implications, measurement systems and long-term sustainability of impact.

Duration (or Timeframe) refers to the period between the start and completion of a program, investment or agreement, and is essential for defining when outcomes and impacts are expected to occur.

An Endowment is a permanently invested pool of capital dedicated to ensuring the long-term financial sustainability of a foundation or institution, where the investment returns fund mission-related programs and activities.

Energy Transition Funds and Regional Support Programmes are financing mechanisms designed to support economic, social and structural transformation in regions dependent on fossil fuels or carbon-intensive industries. They finance energy system transformation, economic diversification, job creation, local entrepreneurship and regional resilience, with the aim of ensuring a just and inclusive transition for affected communities.

The Enterprise whose intention it is to embed contributing positively to sustainable development and the SDGs into its purpose, strategy, management approach, governance practices and decision-making. Enterprises may be publicly listed, public interest and private entities (including profit, not-for-profit, social enterprise entities), non-government organizations (NGOs), small and medium enterprises (SMEs) and state-owned and other public sector entities.

Enterprise Value refers to a measure that represents a company’s total economic value. It is equal to the sum of the company’s market capitalization and its total debt, and reflects the approximate price that would be paid to acquire the entire company.

A framework used to assess an organisation’s performance and risks beyond financial metrics, by considering environmental factors (climate impact, resource use), social factors (labour rights, community impact, equality) and governance practices (transparency, ethics, board structure and accountability). ESG helps investors and institutions evaluate sustainability performance and long-term value creation.

A set of criteria used to assess an organisation’s performance beyond financial outcomes by evaluating its environmental impact (climate, resource use, environmental risk management), social impact (labour rights, human rights, community impact, equality and inclusion) and governance practices (ethics, transparency, board structure, accountability). ESG criteria help investors evaluate risks and opportunities more comprehensively and support responsible and sustainable investment decisions.

Equity Instruments are financial tools that provide investors with ownership interest in a company, such as shares or equity stakes. In impact investing, they enable long-term, value-aligned capital participation.

Voluntary standard for use-of-proceeds bonds that finance green projects that; significantly contribute to at least one of the environmental objectives of the EU Taxonomy, do not substantially harm the others, and otherwise meet the criteria and thresholds in the taxonomy proposal (including meeting minimum social safeguards). Use of the term ‘EU Green Bond’ is only permitted when all components of the EU GBS are met. The SDGs complement the EU GBS.

Proposed EU Taxonomy for Sustainable Activities. A list of economic activities with performance criteria for their contribution to six environmental objectives: Climate change mitigation, Climate change adaptation, Sustainable use and protection of water and marine resources, Transition to a circular economy, Waste prevention and recycling, Pollution prevention and control, Protection of healthy ecosystems. To be included in the proposed EU Taxonomy, an economic activity must contribute substantially to at least one environmental objective and do no significant harm to the other five, as well as meet minimum social safeguards.

A systematic process of assessing the design, implementation and results of a project, programme, policy or investment to determine its effectiveness, efficiency, relevance, impact and sustainability. Evaluation supports decision-making, organisational learning, accountability and continuous improvement. Monitoring data often provides the primary evidence base for evaluation.

A planned approach that outlines how an investor, organisation or project will conclude its involvement and realise value at the end of an investment or intervention period. An exit strategy helps manage financial returns, risks and long-term continuity. It may include methods such as sale, public offering (IPO), share transfer, merger or liquidation. In impact investing, exit strategies also consider the continuity and preservation of social and environmental impact.

Positive or negative, intentional or unintentional, direct or indirect, impacts on people, communities, society or the planet caused by an entity which is not reflected in market prices (i.e. an entity’s enterprise value or an investment’s valuation).

A professional structure established to manage the wealth, investments and financial affairs of high-net-worth families or multi-generational family entities. Family offices typically provide services such as investment management, tax and estate planning, philanthropy management, risk management and strategic advisory to ensure the sustainable preservation and growth of family wealth. There are single-family offices serving one family and multi-family offices serving multiple families.

Fiduciary Duty refers to the legally binding obligation of a person or institution to act in the best interests of another party when managing that party’s assets, rights or interests. It encompasses duties of loyalty and care, requiring fiduciaries to avoid conflicts of interest, manage risks prudently and prioritize beneficiaries’ interests above their own.

The pool of funds that is available to an organization for use in the production of goods or the provision of services, and that is obtained through financing mechanisms such as debt, equity, or grants, or generated through the organization’s operations or investments.

Financial Instruments are contracts, assets or mechanisms that enable the transfer of capital, facilitate investment, manage risk and support savings within financial markets. They include a wide range of instruments such as debt securities, equities, investment funds, bonds, derivatives and impact-oriented products like green bonds, social bonds and sustainability-linked instruments. In the context of impact investing, financial instruments play a key role in directing capital toward activities and initiatives that generate measurable social and environmental impact alongside financial returns.

Financial Materiality refers to the relevance of information that could reasonably influence an organisation’s financial performance, position or future cash flows.

Financial proxy refers to the monetary value assigned to a social, environmental or economic outcome, allowing it to be expressed, analyzed and compared in financial terms. It helps translate impact into economic value, such as the cost savings generated by improved public health, the financial value of carbon emission reductions or the economic contribution of a social initiative. In impact measurement and valuation, the concept of financial equivalent supports more informed decision-making by linking impact performance to financial understanding.

Financial Sustainability refers to the capacity of an organisation, programme, project or investment to manage its financial resources in a way that ensures long-term continuity and stability, enables the sustained delivery of activities without disruption, and demonstrates resilience to financial risks and shocks. Financial sustainability encompasses elements such as revenue diversification, financial risk management, budget discipline, efficient use of resources, financial resilience and long-term financial planning. In the context of impact investing and sustainability, financial sustainability not only involves maintaining financial viability, but also structuring financial models in a way that supports and reinforces social and environmental impact.

Fixed-Income Securities are marketable financial instruments that provide investors with fixed or predictable returns over time, such as bonds and notes. They are distinct from real assets like real estate, which may generate income but are not classified as fixed-income securities.

Forgivable Loans into Grants are loans that may be fully or partially forgiven if certain predefined conditions are met; otherwise, they remain repayable. These conditions often relate to achieving social or environmental impact targets, meeting performance indicators or fulfilling mission-aligned commitments. In the context of impact investing and social finance, forgivable loans help de-risk investments, improve access to finance for impact-driven initiatives and incentivize performance-based impact creation.

A Foundation is a mission-driven, non-profit institutional structure established to serve public benefit objectives, allocating its resources to activities that generate social value rather than profit. Foundations commonly operate in areas such as education, health, culture, social services and development.

The Fund whose intention it is to embed contributing positively to sustainable development and achieving the SDGs into its purpose, strategy, management approach, governance practices and decision-making. Funds may be private equity, private debt or venture capital funds.

The entity responsible for implementing the Fund’s strategy and managing its portfolio.

Raises the funds and manages day-to-day operations of the Fund, including sourcing and structuring investments, and exiting investments to make distributions to limited partners.

The Global Impact Investing Network (GIIN) is one of the world’s leading platforms bringing together investors, funds and institutions engaged in impact investing, supporting the ecosystem through research, standards development, data, knowledge sharing and capacity building.

The Global Impact Investing Rating System (GIIRS) is an independent, standardized rating system that assesses the social and environmental performance of impact-focused companies and funds, enabling comparability, accountability and credibility within the impact investing ecosystem.

The Global Steering Group for Impact Investment (GSG Impact) is an independent, global leadership platform that brings together National Partners (NPs) and key stakeholders to accelerate the development of impact investing worldwide. GSG Impact works to embed impact into the global financial system by supporting policy reform, market development, capacity building, and the advancement of impact measurement and management practices, enabling capital to be directed towards achieving measurable social and environmental outcomes.

A Green Bond is a debt instrument whose proceeds are exclusively or largely allocated to projects that deliver clear environmental benefits, such as renewable energy, energy efficiency, sustainable transport, waste management or climate resilience initiatives. Their issuance and use of proceeds are typically guided by frameworks such as the ICMA Green Bond Principles, ensuring transparency, accountability and credible environmental impact reporting.

The Green Bond Principles (GBP) are voluntary guidelines that promote transparency, integrity and disclosure in the issuance of green bonds, ensuring that proceeds are used exclusively to finance or refinance environmentally beneficial projects.

Green Investments are investments directed toward projects or sectors that aim to enhance environmental sustainability, mitigate climate change or reduce environmental risks, while also seeking financial returns. They typically focus on areas such as renewable energy, sustainable infrastructure, environmental protection projects and green financial instruments such as green bonds.

Green Technology refers to technologies that minimize environmental degradation, reduce greenhouse gas emissions, enhance resource efficiency and support sustainable production and consumption models. It encompasses renewable energy systems, low-carbon industrial technologies, circular economy innovations, carbon capture technologies and energy efficiency solutions.

An international independent standards organization that helps businesses, governments and other organisations understand and communicate their environmental, economic and social impacts. The GRI Standards are global and distributed as a free public good.

A Guarantee is a financial mechanism in which a third party commits to fulfill payment obligations if the primary obligor fails to do so. It is used to mitigate risk, enhance investor confidence and improve access to finance. In the context of impact investing, guarantees help de-risk investments in social, environmental and development-oriented initiatives, thereby mobilizing private capital and supporting scalable and sustainable impact.

A High-Engagement Partnership refers to a collaborative model in which funders do not only provide capital but also actively engage with the investee organization by offering strategic guidance, governance support, mentoring, capacity building and access to networks. This approach is especially relevant in impact investing and social enterprise development to enhance both performance and impact outcomes.

Human capital refers to the competencies, capabilities, experience, and motivation of individuals to innovate that contribute to an organization’s ability to create value. It includes individuals’ alignment with and support for an organization’s governance framework, risk management approach, and ethical values; their capacity to understand, develop, and implement organizational strategy; and their loyalty, motivation to improve processes, products, and services, as well as their abilities to lead, manage, and collaborate.

Hybrid Financing refers to the approach of combining multiple financing sources and instruments (debt, equity, hybrid instruments, grants, etc.) to support an organization or project. It aims to enhance financial resilience, distribute risk and enable sustainable capital structures.

Hybrid Financial Instruments are financing tools that combine features of debt and equity, often offering flexible repayment terms, conversion options and structured risk–return sharing. In the context of impact investing, it is used to create flexible, scalable and investor-attractive structures for projects that require sustainable financing.

A Hybrid Structure refers to a design approach that combines elements of different financial, governance, or organizational models to enhance flexibility, resilience, and effectiveness. In the financial context, a hybrid structure describes an arrangement in which multiple financing mechanisms are deliberately structured within a single model, enabling the alignment of diverse risk, return, and impact objectives.

A not-for-profit membership association headquartered in Switzerland that serves 580 member firms from 62 countries in global capital markets. Serves as Secretariat for the Green Bond Principles (GBP) and Social Bond Principles (SBP), and Sustainability Bond Guidelines (SBG).

The sister organization of the World Bank and member of the World Bank Group. The largest global development institution focused on the private sector in developing countries.

Impact refers to the causal and meaningful changes in the lives of individuals, communities or the environment that can be attributed to an activity, programme or investment. Impact goes beyond outputs and immediate outcomes to capture longer-term, lasting change.

Impact Analysis is the systematic process of assessing the economic, social and environmental outcomes and the value created by a program, project, investment or policy. Rather than focusing only on “outputs”, Impact Analysis evaluates the changes and long-term effects (outcomes and impact) resulting from implemented actions. The process typically involves tools such as stakeholder analysis, qualitative and quantitative data collection, monitoring frameworks, comparative assessment and validation mechanisms. In the context of impact investing and sustainability, Impact Analysis aims to understand and demonstrate how investments generate measurable and meaningful social, environmental and economic value.

Impact Assessment is a systematic process used to identify, analyse and manage the actual or potential impacts of a policy, project, programme or investment on individuals, communities, society or the environment, before implementation or during delivery. It is primarily designed to inform decision-making, considering both positive and negative effects, and is commonly used as a preventive, guiding or mitigation tool. Impact assessment does not require causal attribution; instead, it places strong emphasis on stakeholder engagement, qualitative analysis, risk–impact considerations and forward-looking judgments. It is typically conducted ex-ante or during implementation.

Impact Assurance is the process by which an organization’s impact data, methodologies, indicators and reported results are independently verified by qualified third parties, in line with recognised professional and international standards. It enhances the credibility, reliability and transparency of impact measurement and reporting, strengthening stakeholder trust in impact claims and performance.

Impact Bonds are outcomes-based financing and contracting models in which private investors provide upfront capital to enable service providers to deliver interventions, while a public authority or donor (the outcome payer) commits to making payments only if pre-defined and independently verified outcomes are achieved. In impact bonds: Payments are linked to outcomes, not activities or outputs, performance risk remains largely with investors until outcomes are achieved, service providers are responsible for implementing interventions to deliver the agreed social or development outcomes. Despite their name, impact bonds are not bonds in the traditional financial sense. They do not offer fixed returns, and investor repayment is entirely contingent on the successful achievement of outcomes. As such, impact bonds are best understood as innovative mechanisms for financing and contracting public services, rather than financial securities. Impact bonds include Social Impact Bonds (SIBs) and Development Impact Bonds (DIBs).

An Impact Chain is the structured representation of the cause-and-effect pathway linking inputs to activities, outputs, outcomes and ultimately long-term impact. It clarifies how change is expected to occur, supports impact measurement and strengthens accountability and strategic decision-making.

Impact Economy refers to an economic system in which financial, social and environmental value are jointly prioritized, and where public institutions, private sector, civil society and investors work together to create positive societal outcomes. In an Impact Economy, capital, business strategies and policies are intentionally directed towards generating measurable positive impact alongside financial performance. The impact economy is not an economic system in which impact investing merely operates, but one in which it is the dominant and defining logic.

Impact Evaluation is a systematic evaluation process conducted after implementation to determine what changes have actually occurred as a result of a programme, project, investment or policy, to assess the extent to which these changes can be attributed to the intervention itself (causality), and to understand what these outcomes mean for stakeholders. Rather than focusing solely on “what was done”, impact evaluation seeks to answer the questions “what changed?”, “for whom did it change?”, “how much did it change?” and “was this change truly caused by the intervention?”. It therefore relies on causal analysis, using a combination of quantitative and qualitative methods, comparative approaches, control or comparison groups, monitoring indicators and verification mechanisms. Impact evaluation is typically conducted ex-post.

Impact investments are investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return.

The ongoing practice of integrating sustainable development and impact considerations into decision-making and practices through strategy, management approach, disclosures, and governance to optimize contributions to sustainable development and the SDGs. This includes setting ambitious impact goals and targets in the context of suitable baselines and thresholds; involving Stakeholders in decision-making; identifying, measuring, valuing, managing, and disclosing relevant impacts; and establishing learning and continuous improvement mechanisms.

An Impact Map is a structured visual framework that illustrates the logical pathway from activities to outputs, outcomes and ultimate impact of a program, project or investment. It often includes stakeholders, inputs, causal links and assumptions, helping clarify how change is created and evidenced.

Impact Materiality refers to the significance of an organisation’s actual or potential impacts on people and the environment, focusing on effects beyond the organisation itself.

Impact Measurement and Management (IMM) is the practice of defining, measuring, tracking and using impact information to inform decision-making and improve social and environmental performance. IMM focuses on managing impact, not only reporting it.

Impact Monitoring is the ongoing, systematic process of tracking a program’s or investment’s performance against defined impact indicators over time. It helps organizations understand progress, identify deviations, support learning and manage impact more effectively.

An Impact Organization is an entity that places social and environmental impact at the core of its mission and operations, defining its success not only through financial performance but also through the positive value it creates for society and the environment. Such organizations intentionally measure, manage and report their impact.

Impact Risk refers to the likelihood that an investment, program or project may not generate the expected social or environmental outcomes, may produce lower-than-anticipated results, may cause unintended negative effects, or may misrepresent its actual impact. Impact Risk can arise from design limitations, implementation challenges, data quality issues, external factors, stakeholder dynamics or measurement inaccuracies. In impact investing, managing impact risk involves strategic planning, robust monitoring, verification and continuous improvement practices.

Impact Strategy is the structured framework that defines how an organization, investor or program will create, manage and sustain its social and environmental impact. It sets out priority impact areas, key stakeholders, outcomes to be achieved, measurement and monitoring approaches, risk management considerations and governance arrangements. A sound Impact Strategy is aligned with institutional objectives, evidence-based and designed for long-term value creation.

Impact targets are specific and measurable social, environmental or development outcomes that an organization, fund or investment aims to achieve, serving as reference points for impact management and performance tracking.

An outcomes-based hypothesis of how an Enterprise, Fund, Issuer, investment, or Investee is expected to contribute positively to sustainable development and the SDGs. The impact thesis may be separate to, but ideally is integrated into, strategy, business models or investment thesis, as applicable.

Impact Valuation refers to the process of evaluating and determining the value of the social, environmental, and economic impacts created by a program, project, investment or policy. It goes beyond identifying impact by aiming to assess the scale, significance, relevance and where possible the monetary value of those impacts on stakeholders. The process typically considers elements such as output–outcome–impact distinction, stakeholder contribution, additionality, causality, measurement indicators and verification approaches. In the context of impact investing, Impact Valuation helps understand, compare and integrate impact performance into decision-making and reporting processes.

The superficial or insincere display of concern for impacts on people and the planet or the exaggeration of impact claims to attract investors or customers.

An Incubator is a structured support mechanism designed to assist early-stage enterprises, social ventures and innovative business ideas during their initial development phase by providing tailored resources and guidance. Support commonly includes training, mentorship, business model development, technical and administrative advisory services, workspace, access to networks and, in some cases, financing or investment readiness support. Within the impact ecosystem, incubators play a key role in strengthening impact-driven initiatives and enabling sustainable and scalable social and environmental solutions.

Indicators are quantitative or qualitative metrics used to measure, monitor and evaluate the performance, outputs, outcomes and impact of a program, project or investment. In impact measurement and management, indicators help demonstrate progress, support learning, inform decision-making and enhance accountability. They may include output indicators, outcome indicators and impact indicators.

Institutional Investors are organizations that manage large pools of capital and invest professionally, such as pension funds, insurance companies, investment funds, asset managers and development finance institutions. They play a crucial role in scaling capital toward impact investments.

A reporting approach that presents an organisation’s financial performance together with its environmental, social and governance (ESG) impacts and its ability to create long-term value in a single, coherent report. Integrated reporting provides a holistic view of the organisation’s business model, strategy, risks and opportunities, stakeholder relationships and value creation across its value chain, combining financial and non-financial information.

Intellectual capital refers to the pool of knowledge-based resources that support an organization’s ability to create value, including intellectual property such as patents, copyrights, software, rights, and licenses, as well as organization-specific knowledge such as tacit knowledge, systems, procedures, and protocols.

Intentionality is the deliberate intention to generate social and environmental impact through an investment or program, and is a defining characteristic of impact investing.

Interdependency refers to the complex and interconnected relationships between environmental, social, and economic systems, as well as the sectors and outcomes within them, whereby actions and decisions in one area influence, and are influenced by, others. In the context of impact management and the SDGs, interdependency highlights that progress in one goal, system, or outcome can generate positive or negative effects across other goals and systems.

A licensed financial institution that intermediates transactions between investors and capital markets by executing buy–sell orders and facilitating the trading of securities. Brokerage firms provide services such as investment advisory, portfolio brokerage, public offerings and derivatives trading, under the regulation and supervision of capital market authorities.

The ISSB is a global standard-setting body that develops consistent, comparable and high-quality sustainability and climate-related disclosure standards to enhance transparency for investors and capital markets.

Intervention refers to a program, policy, investment or set of actions implemented to address a specific social, environmental or economic challenge, and whose outcomes and impacts are evaluated.

An Investee Organisation is an entity that receives investment capital from an investor and is expected to deliver agreed financial, operational and/or impact outcomes. This term is used for commercial companies, social enterprises, cooperatives and impact-oriented organizations."

Investment is the allocation of capital to an asset, project or enterprise with the expectation of generating financial, social or environmental value. Increasingly, investment strategies consider not only financial returns but also broader societal and environmental outcomes.

An Investment Proposal is a formal document submitted by an enterprise, organization or project seeking investment, outlining its business model, financial requirements, revenue structure, growth strategy and intended social/environmental impact. It serves as a primary reference for investors during decision-making processes.

Investment Readiness Programmes are structured support mechanisms designed to help enterprises, including social enterprises and impact-driven organizations, strengthen their business capacity, financial structures, governance and impact management systems in order to attract investment. They typically include mentoring, technical advisory, training, business planning support and preparation for investor engagement.

Provides financial capital to other entities with an expectation of financial and/or impact return.

IRIS / IRIS+ is a globally recognized standardized framework for measuring and reporting impact, developed by the Global Impact Investing Network (GIIN). It provides comparable, credible and consistent indicators to assess social, environmental and economic outcomes of impact investments, while also offering guidance on impact strategies and performance management.

An entity that issues securities such as bonds, notes, or shares in order to raise financing, and that is legally responsible for fulfilling the obligations arising from the issuance, including the repayment of principal and interest and compliance with disclosure requirements. Issuers may include sovereigns, sub-sovereign public entities (such as municipalities or regions), supranational organizations, corporations, financial institutions, and special purpose entities.

Just Transition refers to the process of shifting towards a low-carbon, environmentally sustainable and climate-resilient economy in a way that is fair, inclusive and socially equitable, particularly for workers, vulnerable groups, local communities and sectors most affected by the transition. It seeks to ensure that climate and sustainability policies do not exacerbate social inequalities, but instead actively mitigate social risks and enable affected populations to access new economic opportunities.

Just Transition Bonds are debt instruments issued to finance projects that support the transition to a low-carbon and sustainable economy while explicitly addressing the social and economic impacts of this transition. They aim to protect workers and communities affected by structural change, support reskilling and employment transition, and promote inclusive and equitable outcomes alongside environmental objectives.

The core principles and components that ensure the economic, social and environmental impacts of the sustainability and low-carbon transition are managed fairly. These elements include protecting employment, creating new decent jobs, reskilling workers, supporting affected communities, reducing inequalities, strengthening local economies, ensuring stakeholder participation and fairly distributing the costs and benefits of the transition.

Just Transition Finance Instruments refer to financial mechanisms designed to support the fight against climate change and the transition to a low-carbon economy, while ensuring that the economic, social and environmental impacts of this transition are managed in a balanced and equitable manner. These instruments specifically aim to support workers, communities and sectors that may be adversely affected by the transition. They seek to ensure the fair sharing of transition costs by protecting employment, promoting skills development and reskilling, strengthening local economies, reducing social inequalities, and upholding the principle that “no one is left behind.” Instruments within this scope include, but are not limited to: Just Transition–themed bonds, social and sustainability bonds, publicly supported funds and grants, blended finance structures, energy transition funds and regional support programmes, impact-oriented investment instruments

Lease Certificates (Sukuk) are securities issued by an asset leasing company for the purpose of financing all types of assets and rights, granting their holders entitlement—in proportion to their holdings—to the income generated from the underlying asset or right. Lease certificates offer investors a predetermined rental income at maturity and constitute a fixed-income investment instrument providing stable returns over the medium to long term.

Investors in the private equity, debt or venture capital fund, for instance pension funds, institutional investors, or high net-worth individuals.

Long-Term Investment refers to investments made with the objective of creating sustained value over extended periods, independent of short-term market fluctuations. It is commonly associated with infrastructure, sustainability, development and climate-oriented projects, aiming not only for financial performance but also for resilience, social benefit and environmental sustainability.

Manufactured capital refers to human-created physical objects, distinct from natural physical resources, that are available to an organization for use in the production of goods or the provision of services. It includes buildings, equipment, and infrastructure such as roads, ports, bridges, and waste and water treatment facilities. Manufactured capital is typically created by other organizations, but also includes assets produced by the reporting organization for sale or acquired for its own use.

Materiality refers to the identification of issues that could significantly influence an organisation’s decision-making processes, financial performance, reputation, or social and environmental outcomes. As a fundamental principle in sustainability and impact reporting, materiality determines which topics should be prioritised for consideration, management and disclosure.

Quantitative or qualitative indicators that allow entities (i.e. Enterprises, Funds or Issuers) to measure and assess SDG performance across the Five Dimensions of Impact.

Mezzanine Financing is a hybrid form of funding positioned between debt and equity, typically carrying higher risk and return potential, often with conversion or performance-based features. It is commonly used for scaling enterprises and projects.

Microfinance refers to providing small-scale financial services such as microloans, savings and insurance to individuals or microenterprises with limited access to conventional banking, supporting financial inclusion and economic empowerment.

Monetisation refers to the process of expressing social or environmental outcomes and impacts in monetary terms in order to support comparison, decision-making and resource allocation. It enables the valuation of non-financial benefits and helps assess the relative value of different interventions. In the context of impact measurement, monetisation does not imply revenue generation, but rather an analytical method for estimating the economic value of impact.

Multilateral Development Banks (MDBs) are international financial institutions established by multiple countries to support sustainable development, economic growth, poverty reduction and social and environmental impact in developing and emerging economies. MDBs provide long-term financing, guarantees, equity investments and technical assistance, and play a catalytic role in mobilising private capital through blended finance and results-based financing mechanisms.

National Partners (NPs) are country-level, multi-stakeholder platforms within the GSG Impact network that bring together government, private sector, civil society, academia and financial actors to advance the development of national impact investing ecosystems. National Partners provide leadership in policy development, strategic direction, ecosystem coordination, capacity building and awareness raising, while supporting the alignment of impact capital with country-specific priorities and contexts.

Natural capital refers to the stock of renewable and non-renewable natural resources and natural processes that enable the provision of products and services supporting an organization’s past, present, and future wellbeing. It includes air, water, land, minerals, and forests, as well as biodiversity and ecosystem health.

Negative Screening is the practice of excluding sectors, companies or activities from an investment portfolio based on ethical, environmental, social or governance criteria.

Net Zero / Carbon Neutrality refers to achieving net-zero greenhouse gas emissions by measuring emissions, reducing them as much as possible, and compensating for the remaining emissions through removal or offsetting mechanisms, ultimately balancing what is emitted with what is removed from the atmosphere.

An international organisation that works to build better policies for better lives by developing evidence-based international standards and supporting governments and stakeholders in addressing social, economic, and environmental challenges through data, analysis, and the sharing of best practices.

An Outcome Fund is a financing structure that pools resources from one or more funders in order to make payments for pre-defined and agreed outcomes. Outcome funds enable the implementation of multiple impact bonds or outcomes-based contracts under a single framework. Payments from an outcome fund are made only when the criteria agreed ex ante by the funders are met. In this way, payments are directly linked to the successful achievement of outcomes, rather than to activities or inputs.

Outcomes-Based Financing is a funding approach in which payments are linked to independently verified outcomes rather than activities delivered. In most structures, financial risk is borne primarily by investors until outcomes are achieved, although in some models service providers may also carry performance or financial risk. Outcome payers only disburse funds once pre-agreed results are successfully delivered.

Outcomes refer to the measurable changes that occur in stakeholders’ behaviors, conditions, skills, capacities or living circumstances as a result of an intervention, program or investment, beyond the direct outputs of activities. Outcomes may be positive or negative, intended or unintended, and reflect the actual level of change experienced by stakeholders as a result of an activity.

An Outcome-Based Contract is a contractual arrangement in which payment or funding is contingent upon the achievement of predefined, measurable outcomes. The focus is not on activities or outputs delivered, but on verified results and impact. Outcome-based contracts are commonly used in Pay for Success mechanisms and impact bond structures.

The direct products, services or measurable deliverables generated as a result of a project, programme or intervention. Outputs represent the immediate and tangible results of activities but do not on their own indicate the ultimate social or environmental impact. They are usually quantitative (e.g. number of people trained, number of programmes delivered).

Participatory Loans are financing structures in which repayment is linked to revenue or profit performance rather than fixed interest terms, allowing flexible repayment and shared risk between lenders and borrowers, often used for early-stage or impact-driven initiatives.

Patient Capital refers to long-term, impact-oriented investment capital that does not require immediate financial returns and supports sustainable value creation.

Pay for Success a financing approach in which payments are made only when predefined, measurable outcomes are independently verified. Instead of funding activities, the model incentivizes the achievement of real, demonstrable impact and is a core component of results-based financing mechanisms such as social and development impact bonds. The term is primarily used in the United States to describe impact bonds or social impact bond–type arrangements. In the United Kingdom and other contexts, similar approaches are more commonly referred to as outcomes-based contracting, social outcomes contracts or payment-by-results.

Place-Based Impact Investing refers to a geographically targeted investment approach that aims to enhance social well-being, strengthen local economies and reduce inequalities within a specific city, region or community. Rather than focusing solely on sectoral priorities, this approach aligns investment strategies with local needs, inclusive development objectives and regional transformation goals.

A Portfolio is a collection of diversified investments held by an individual or institution, increasingly managed with both financial and impact performance considerations.

A Portfolio Manager (or Fund Manager) is a professional responsible for managing investment portfolios, setting strategies and making investment decisions on behalf of clients or funds.

A Pre-Acceleration Programme refers to support programmes designed for early-stage ventures to help them clarify their business models, strengthen their organisational and operational capacities, and increase their level of investment readiness prior to entering a full-scale accelerator programme. These programmes typically provide mentoring, business development support and access to networks.

The Pre-Investment Stage refers to the phase before an investment decision is made, involving preparation, assessment, analysis and structuring processes. It includes identifying opportunities, evaluating risks and potential returns, conducting financial and impact assessments and designing the terms and structure of the investment.

Private Equity refers to long-term capital investments made in privately held companies, often involving active ownership to support growth, restructuring or strategic transformation.

Private Investments are investments made outside public markets, typically involving privately negotiated transactions with limited investor participation, including private equity, venture capital, private debt and alternative investment structures.

Pro-bono Contribution refers to the provision of professional services, expertise or time—normally offered on a paid basis—delivered free of charge to support social good initiatives. Unlike general volunteering, pro-bono contributions are based on specific professional skills and are typically provided in areas such as legal, financial, strategic, technical or managerial support.

A Pro-bono Expert is a professional who offers specialized expertise without financial compensation to support impact-focused initiatives.

Predetermined agreed actions in response to potential adverse events.

An indirect measure of an outcome that is correlated to that outcome. It may be used when direct measures of the outcome are unavailable or unfeasible to collect.

Public Funds and Grant Schemes are financial instruments provided by public authorities to support inclusive and equitable transitions, particularly where market mechanisms alone are insufficient. They typically offer non-repayable or concessional financing to fund employment support, reskilling programmes, regional development initiatives and social protection measures linked to structural economic and climate transitions.

Public–Private Partnerships (PPP) are collaborative arrangements between public authorities and private sector entities to finance, develop and manage public services, infrastructure or social initiatives, typically under long-term contractual frameworks. In the impact space, PPPs help enable innovative financing, scalable delivery models and stronger social and environmental outcomes.

Real Assets are tangible, physical assets that hold intrinsic value and are typically associated with long-term investment. They include real estate, infrastructure, energy facilities, natural resources, agricultural land and other physical production assets. In the context of impact investing, real assets often encompass renewable energy projects, sustainable infrastructure, environmental conservation assets and socially beneficial developments that generate both financial returns and measurable social and environmental outcomes.

Recoverable Grants are grants initially provided as non-repayable funding but may become repayable partially or fully if the funded initiative achieves agreed financial performance, sustainability milestones or measurable impact outcomes. If objectives are not met, repayment may not be required or more flexible terms may apply. This mechanism ensures that philanthropic or catalytic capital can be recycled, strengthens accountability and supports the creation of a more sustainable impact finance ecosystem.

A Redeemable Share is an equity instrument that can be bought back by the issuing entity under predefined conditions, such as after a specified period or upon meeting certain financial or performance criteria. In the context of impact investing, redeemable shares are used as hybrid financing instruments that provide investors with a planned and limited exit option, while enabling investee organizations to preserve mission alignment and long-term impact objectives. Redemption terms may be linked to financial capacity, cash flows, or agreed performance milestones and do not necessarily guarantee fixed returns.

Responsible Investment is an investment approach that integrates Environmental, Social and Governance (ESG) factors into investment analysis and decision-making alongside financial considerations to promote more sustainable capital allocation.

Results-based financing (RBF) approaches tie payment to the achievement of pre-specified objectives. In some forms of RBF, payment is tied to outputs, such as completion of an activity.

Retail Investors are individual investors who buy securities or make investments for their personal accounts rather than on behalf of institutions.

Return on Investment (ROI) is a performance metric that measures the financial gain or value generated relative to the cost of an investment. It helps determine how efficiently capital has been used and enables comparison between different investment options. In the context of impact investing, ROI is also considered alongside social and environmental value, highlighting the need for a broader perspective than purely financial performance.

Revenue Sharing Agreements are contractual arrangements that define how revenues generated from a project, investment or business model are distributed among multiple parties based on predetermined terms and ratios. These agreements aim to create a fair allocation of risk and return, enhance financial flexibility and strengthen long-term sustainability. In the context of impact investing, revenue sharing agreements are often used in social enterprises, impact-driven initiatives and public–private partnerships to ensure that financial returns support sustainable social and environmental outcomes.

The willingness of the entity and Stakeholders to accept risk in pursuit of certain outcomes or objectives, before requiring measures to be taken to reduce or mitigate the risk.

Taking into account the likelihood and magnitude of risk when making decisions, including deciding how much information is sufficient to make a decision, and when impact data or performance should be assured.

The entity’s and Stakeholders’ willingness to withstand variability in outcomes or outcomes that differ from what is expected.

Risk-Adjusted Return refers to the evaluation of an investment’s return in relation to the level of risk taken to achieve that return. Rather than focusing on absolute performance, it assesses how efficiently returns are generated given the associated risks. In impact investing, risk-adjusted return analysis considers financial, operational, policy and impact-related risks to enable more meaningful comparison across investment opportunities.

Scaling up (or Scaling) refers to the process of growth and expansion through which a successful initiative, programme or model increases its social and environmental impact by extending its reach, capacity or geographic coverage.

Monitoring is the ongoing, systematic process of tracking performance against predefined indicators, collecting data and assessing progress over time. In impact investing, monitoring includes tracking not only activities but also outputs, outcomes and impact pathways.

Broad category that includes use-of-proceeds, SDG-linked (i.e. performance-based) and general purpose bonds either issued by companies, governments and municipalities, or for activities and projects (e.g. issued through a special purpose entity).

UNDP initiative to create a suite of complementary resources to facilitate increased private sector investment towards advancing the SDGs. The SDG Impact products include the SDG Investor maps, and the SDG Impact Standards, assurance framework and online IMM training developed through the Case Centre at Duke University.

232 indicators used to measure the 169 targets related to the 17 SDGs.

Bonds whose performance is linked to achieving (or contributing to) certain SDG related outcomes or targets, such that failing to meet those outcomes or targets results in a pre-specified cause of action (e.g. a step-up/step-down in the margin required to be paid on the bond if impact performance is lower/higher than a pre-specified target).

169 targets that have been set in relation to the 17 SDGs.

SDGD (Sustainable Development Goals Disclosure) Recommendations are a set of reporting recommendations designed to enable organizations to identify material risks and opportunities related to the Sustainable Development Goals (SDGs); align their strategies, business models and operations to contribute to the SDGs; and transparently disclose their impacts on the SDGs. These disclosure recommendations are grounded in long-term value creation, materiality, stakeholder orientation and the sustainable development context.

A Second Party Opinion (SPO) is an independent assessment provided by a qualified external organisation that evaluates the alignment of a bond, financial instrument or financing framework (e.g. green, social, sustainability or impact bonds) with relevant principles, standards or taxonomies. SPOs assess the credibility of the issuer’s framework, intended impact objectives, governance structures and use-of-proceeds. They are distinct from impact assurance, as SPOs typically focus on ex-ante alignment rather than ex-post verification of results.

Securitisation is the process of pooling financial assets such as loans or receivables and converting them into tradable securities, improving liquidity and distributing risk. It is increasingly used to finance social and environmental impact initiatives.

Seed Funding (or Seed Capital) is the initial capital provided at the earliest stage of a venture to develop its business model, validate its product or solution and prepare for further growth.

The process of identifying a range of plausible scenarios based on different assumptions (e.g. an expected case, a worst case, and a best case scenario), and assessing the variability of outcomes based on changes in the scenario. This is especially important in uncertainty, i.e. when the variables are not completely within, or are outside, the entity’s control (e.g. climate change).

Part of the European Commission’s package of reforms to implement its sustainable finance strategy. Requires all EU-based financial market participants to disclose ESG risks, with additional requirements for investments or products that make specific ESG or sustainable investment claims.

Short-Term Investment refers to investment instruments with a return period that is generally one year or less, characterized by high liquidity and the ability to be quickly converted into cash. They are typically preferred for short-term financial returns, cash management, or risk hedging purposes. In the context of impact investing, short-term investments are often strategically balanced with structures that support the creation of long-term impact.

Social and relationship capital refers to the institutions, relationships, shared norms, and networks within and between communities, stakeholder groups, and other networks that enable the sharing of information and contribute to individual and collective wellbeing. It includes shared values, norms, and behaviours; relationships with key stakeholders and the mutual trust and willingness to engage that an organization builds and maintains with its external stakeholders; intangible assets such as brand and reputation; and an organization’s social licence to operate.

The Social Bond Principles (SBP) are voluntary guidelines designed to support the issuance of bonds that finance projects delivering positive social outcomes, particularly for defined target populations.

A Social Business refers to an enterprise established with the primary objective of addressing a specific social problem, operating on a non-loss and non-dividend basis and designed to be financially self-sustaining. In this model, all profits are reinvested in the business itself or in other social businesses, rather than being distributed as dividends to investors, with the aim of expanding and deepening social impact.

The Social Economy refers to an economic system where social benefit, solidarity and inclusive development take precedence over profit maximization, encompassing organizations such as cooperatives, foundations, associations, social enterprises and impact-driven businesses.

A Social Enterprise is an enterprise whose primary objective is to address a social and/or environmental challenge, and which achieves this objective through a market-based business model, generating a significant share of its income from commercial activities. Social enterprises place impact at the core of their operations and view profit not as an end in itself, but as a means to sustain and scale their mission

A social entrepreneur is a change agent who identifies social or environmental problems and develops innovative, sustainable and scalable solutions, typically through creating and leading an enterprise whose primary goal is to produce social benefit.

Social Impact refers to the positive or negative changes in the living conditions, well-being, behaviours, or access to opportunities of individuals, communities, or society as a result of an activity, project, programme, or investment. Social impact may be direct or indirect and can occur in the short or long term. Social impact goes beyond outputs and encompasses the real changes in people’s lives that result from those outputs.

Social Impact Assessment refers to the systematic process of identifying, analysing, monitoring and managing the actual or potential social impacts of a project, policy, investment or intervention on individuals, groups and communities. Social Impact Assessment considers both positive and negative social effects, is commonly used as a preventive and corrective tool, and does not require the production of causal evidence. Stakeholder engagement and qualitative analysis play a central role in this approach. Rather than proving causality, Social Impact Assessment focuses on understanding the scope, nature and distribution of social impacts.

A Social Impact Bond (SIB) is a results-based financing and contracting model through which private investors provide upfront capital to fund the delivery of a social programme or public service aimed at achieving predefined social outcomes. In this model, the target outcomes are specified ex ante by a public authority or outcome payer and are independently verified at the end of the intervention. Investors are repaid only if the agreed outcomes are achieved; if outcomes are partially achieved or not achieved, repayments are reduced or may not occur at all. Social Impact Bonds shift performance risk away from the public sector and onto investors, promoting more efficient use of public resources and encouraging innovation in service delivery. Despite the term “bond,” Social Impact Bonds are not bonds in the conventional financial sense: they do not offer fixed returns, and payments are entirely contingent on outcome achievement. They should therefore be understood as an innovative public service financing and contracting mechanism rather than as financial securities.

Social Impact Funds refer to investment funds that allocate capital with the explicit intention of generating measurable social impact while also targeting financial returns. These funds invest in organisations and projects that aim to address social challenges, demonstrate a clear social impact intent, and commit to measuring and reporting the impact they generate. Depending on their investment strategies, social impact funds may target below-market, market-rate or above-market returns and can operate across a range of asset classes, including private equity, debt and hybrid financial instruments.

Social innovation is an activity that is social in both its ends and its means, involving the development and implementation of new ideas—products, services, practices or models—that better address social needs while creating new social relationships or collaborations and enhancing society’s capacity to act.

Social Investment refers to investments made with the intention of generating measurable social impact while also targeting a financial return. This approach aims to channel capital toward enterprises, projects and programmes that create long-term social value alongside financial sustainability.

Social Return on Investment (SROI); is an analytical method that monetizes the social, environmental and economic value created by an investment and compares it to the cost of the investment, answering the question: “How much social value is created per unit of investment?”.

The Social Return Ratio expresses the magnitude of social value generated relative to the investment made, helping quantify and compare social outcomes in economic terms.

Social risk can be understood as the potential adverse social impacts of an organization’s or investment’s activities on people and communities—such as human rights issues, labour conditions, community conflict or social exclusion—and is closely linked to the “S” in ESG, often assessed through environmental and social risk management systems.

The Social Sector refers to the field comprising organizations and institutions that work primarily for public and social benefit, including government social services, civil society organizations, social enterprises and community-based institutions.

Social Value refers to the positive social outcomes and improvements in well-being generated by a programme, organisation or investment, extending beyond purely economic outputs to include benefits experienced by individuals, communities and society as a whole.

Soft Loans, also referred to as Concessional Loans, are loans provided on terms more favorable than market conditions, such as below-market interest rates, extended maturities, grace periods, flexible repayment structures and, in some cases, a grant element. They are typically offered by governments, development banks, development finance institutions or international organizations to support projects that generate social, developmental or environmental benefits.

A Sovereign Wealth Fund is a state-owned investment fund that manages national financial assets such as budget surpluses, foreign reserves or natural resource revenues to generate long-term value and support strategic investments.

Spectrum of capital refers to the continuum of capital ranging from philanthropic and grant-based funding to fully commercial market capital, including catalytic capital, blended finance and market-rate investments.

A Stakeholder is any individual, group or organization that affects or is affected by the actions, decisions or outcomes of a program, organization or investment.

Involving Stakeholders in ongoing planning and decision-making that is two way, conducted in good faith, responsive and results in Stakeholders having meaningful agency in decisions that impact them (i.e. there is evidence that Stakeholder needs and preferences influence and change decisions and outcomes). The degree of potential social, economic and/or environmental impact on Stakeholders, the level of risk of and Stakeholders’ tolerance for, unexpected outcomes, and how disadvantaged Stakeholders are will determine the appropriate level and form of Stakeholder involvement.

Application of judgement based on an individual perspective when objective data is not available.

Subordinated Capital (or Residual Capital) is capital with lower repayment priority compared to senior investors, typically absorbing higher risk and thereby protecting other capital layers. In impact investing, it often acts as catalytic capital to crowd in additional investors.

Subordinated (Junior) Loans are loans that rank below senior debt in repayment priority, carrying higher risk and often supporting risk-sharing structures in investment models. They help enable capital stacking and attract private investors.

Sustainability refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs, balancing economic, social and environmental dimensions.

The Sustainability Bond Guidelines (SBG) provide guidance for bonds that finance a combination of green and social projects, integrating the core components of both the Green Bond Principles and the Social Bond Principles.

Sustainability Indicators are quantitative and qualitative metrics used to measure, monitor and evaluate the environmental, social and governance performance of an organization, project or policy.

A Sustainability Report is a document in which an organization discloses its environmental, social and governance performance, impacts, goals and commitments to stakeholders, often aligned with international reporting standards.

Sustainable Development refers to development that meets the needs of the present without compromising the ability of future generations to meet their own needs, balancing economic growth, social well-being and environmental protection.

Sustainable Investment refers to investments that pursue long-term financial returns while supporting environmental and social sustainability, through effective management of ESG risks and opportunities.

An international membership network focused on adopting decision-making, ways of working and resource allocations that embed principles for social value measurement and analysis. The aim is to promote equality and wellbeing and reduce environmental degradation.

The SDG Impact Standards are aligned with SVI’s seven principles of social value. SVI has developed a number of Standards to provide further guidance on implementation of their seven principles of social value including: Involve stakeholders, understand what changes, value the things that matter, only include what is material.

System Change refers to the transformation of the structural conditions that sustain a problem in its current state. These conditions consist of interrelated elements such as policies, practices, flows of resources, relationships and connections, power dynamics, and mental models.

A way of thinking that supports better decision-making by considering the connections and interdependencies between parts of a system, helping reduce unintended consequences and improve overall system performance.

Tailored and Flexible Finance refers to a financing approach in which terms and structures are deliberately designed and adjusted to the objectives, risk–return profile and needs of projects or beneficiaries. It is often used to better support social and environmental outcomes by providing flexibility in repayment schedules, returns, risk-sharing mechanisms and financial structures.

Technical Assistance refers to support provided to strengthen the capacity of organisations, projects or countries, including the provision of expert advice, training, consultancy services and knowledge transfer.

Technology Transfer refers to the systematic process through which knowledge, technologies, processes or innovations are transferred and applied from one organisation, sector or country to another. In the context of climate action and sustainable development, technology transfer plays a critical role in scaling innovative solutions and amplifying impact

The Global North refers to countries that, due to historical, economic, and socio-political factors, generally have higher income levels, advanced industrial development, and stronger institutional capacity. It typically includes countries in North America, Western Europe, Japan, Australia, and New Zealand. In the context of impact investing, the Global North represents regions where capital, technology, and institutional expertise are concentrated and from which a significant share of global impact finance flows originate and are directed.

The Global South refers to countries that are generally categorized as developing or emerging economies, often facing structural development challenges, and largely located in Latin America, Africa, the Middle East and parts of Asia. In the impact ecosystem, the Global South represents regions with significant development needs and high impact potential.

The Paris Agreement is an international, legally binding treaty adopted in 2015 at the United Nations Climate Change Conference (COP21) in Paris. The Agreement aims to limit the increase in global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C. It also provides the overarching framework for global climate action, including emissions reduction, strengthening climate adaptation capacity and scaling up climate finance.

A conceptual framework that explains how and through which steps an intervention, programme, project or investment leads to the desired social, environmental or economic impact. The Theory of Change clarifies the causal links between inputs, activities, outputs, outcomes and impact, while also identifying assumptions, risks and enabling conditions. It supports more systematic planning, implementation, monitoring and evaluation.

The Third Sector refers to the sphere of activity that operates independently of the public and private sectors and encompasses non-profit, voluntary and civil society organisations. The primary purpose of the third sector is to create social benefit rather than generate profit. The third sector includes civil society organisations (CSOs), non-governmental organisations (NGOs), associations, foundations, voluntary organisations, and in some cases certain social enterprises and social initiatives that prioritise public benefit.

A threshold refers to the acceptable range or limit for an outcome or level of performance, as defined by scientific targets, societal norms or the Sustainable Development Goals (SDGs). Performance outside this range is considered negative or unsustainable, while performance within the range is considered positive or sustainable.

Quantitative (not necessarily monetary) comparison of impacts, all of which are not attainable at the same time, informed by stakeholder preferences and the sustainable development context.

Transition Investment refers to investments directed toward sectors, organizations or projects that are in the process of transitioning toward more sustainable, low-carbon and impact-oriented models, even if they are not fully sustainable yet. The goal is to provide the capital and support necessary for transformation, enabling improved ESG performance, resilience and long-term positive impact.

Transition Plans are strategic roadmaps that outline how organisations will align their business models, investments and operations with the transition to a low-carbon, climate-resilient and sustainable economy.

Transition Risks; result from the shift to a low-carbon economy, including policy, regulatory, technological, market and reputational risks.

The Triple Bottom Line is a framework that evaluates organizational performance based not only on financial outcomes but also on social (people) and environmental (planet) results, aiming to move beyond profit-focused assessment and incorporate broader value creation.

The UN HLEG Recommendations on the Net Zero Emissions Commitments of Non-State Entities, released in November 2022 at COP 27, sets out five principles and ten recommendations to create a universal definition of net zero and provide best-practice guidance for non-state actors (businesses, financial institutions, cities and regions) to translate their net-zero pledges and commitments into targets and action that align with their fair share of emissions and support a just transition for all.

An international framework launched in 2006 with the support of the United Nations to encourage investors to integrate environmental, social and governance (ESG) factors into their investment decisions and ownership practices. PRI aims to promote responsible, transparent and sustainable investment approaches that manage risks and contribute to long-term value creation. Institutional investors become PRI signatories and commit to implementing and reporting on these principles. Six Principles for Responsible Investment are voluntary and aspirational: incorporate ESG issues into investments, be active owners, seek appropriate disclosure, promote the Principles, enhance implementation effectiveness, and report activities and progress.

A set of 17 global goals adopted by the United Nations in 2015 as part of the 2030 Agenda for Sustainable Development. The SDGs aim to end poverty, reduce inequalities, protect the environment, ensure inclusive and sustainable economic growth and promote peace and well-being worldwide. They serve as a common framework and roadmap for governments, the private sector, civil society and international organisations.

A permanent intergovernmental body established by the United Nations General Assembly in 1964 supporting developing countries to access the benefits of a globalized economy more fairly and effectively and help equip them to deal with the potential drawbacks of greater economic integration.

The United Nations Development Programme (UNDP) is the UN’s global development network that works to support countries in achieving the Sustainable Development Goals by co-creating solutions with governments and communities. UNDP contributes to addressing global and national development challenges by providing support in policy development, capacity building, and access to finance.

UNEP FI is a unique partnership between the UN and the global financial sector. It was created following the 1992 Earth Summit to promote and enable the integration of sustainability considerations at all levels of operation and decision-making in financial institutions.

A voluntary initiative based on CEO commitments to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

The CFO (Chief Financial Officer) Principles supplement the UN Global Compact’s Ten Principles to support companies in the transition to sustainable development and to leverage corporate finance and investments towards realizing the SDGs.

31 principles (the first 10 of which relate to State duties) implementing the United Nations ‘Protect, Respect and Remedy’ framework on the issue of human rights and transnational corporations and other business enterprises. The Guiding Principles were developed by the Special Representative of the Secretary-General and were unanimously endorsed by the United Nations Human Rights Council in 2011.

Unintended (and usually unforeseen) outcomes of a purposeful action. Unintended consequences include unexpected positive outcomes, unexpected negative outcomes and perverse outcomes (where the purposeful action makes the original problem worse).

A milestone document in the history of human rights. Drafted by representatives with different legal and cultural backgrounds from all regions of the world, the Declaration was proclaimed by the United Nations General Assembly in Paris on 10 December 1948 (General Assembly resolution 217 A) as a common standard of achievements for all peoples and all nations. It sets out, for the first time, fundamental human rights to be universally protected and it has been translated into over 500 languages.

An autonomous research institute within the UN system that undertakes interdisciplinary research and policy analysis on the social dimensions of contemporary development issues.

The process of determining the economic value of an asset, company, investment, project or financial instrument. Valuation typically considers factors such as financial performance, asset structure, cash flows, risk level, market conditions and future expectations. It plays a key role in investment decisions, mergers and acquisitions, fundraising, impact investing and financial reporting.

The interconnected set of activities through which a product or service is designed, produced, delivered to the end user and managed throughout its lifecycle, including procurement, production, logistics, marketing, distribution, sales and after-sales processes. The value chain framework enables organisations to understand, manage and improve their economic, social and environmental impacts across all stages.

Venture Capital refers to investments made in early-stage, innovative enterprises with high growth potential, typically provided through equity or equity-like instruments and accompanied by strategic guidance, managerial support and access to investor networks. In the context of impact investing, venture capital not only aims to generate financial returns but also seeks to support enterprises that are capable of delivering measurable social and environmental outcomes alongside commercial success.

Venture Philanthropy is a form of philanthropic support that applies investment discipline and entrepreneurial approaches to funding social purpose organizations, social enterprises and public interest initiatives. It goes beyond conventional grant-giving by combining financial support with strategic guidance, capacity building, performance monitoring and a strong focus on measurable long-term impact.